37,000 Employees Left Infosys In 2016 As Hiring Drops by 65%; Infosys Says They Will Now Hire More Locals in America

Infosys is suddenly finding itself in lots of controversies. And it seems, the trend will continue for a while.

After a huge debate erupted over the variable pay of Infosys CEO Vishal Sikka, which ended only after his pay was reduced by 40%, another storm appears to have engulfed India’s 2nd largest IT company.

As per reports emerging, a mass exodus is being witnessed at Infosys, as 37,915 engineers left the company last year. And the reason may seem apparent as we discovered that hiring activity has reduced by 65% at Infosys during last fiscal year.

And, to make the matter more interesting, Infosys has declared that from now on, they would be hiring more Americans in their USA offices, and they have admitted that this step has been taken to deal with the H1-B visa controversy, which is threatening to reduce their profits.

Will 2017 prove to the game-changer year for Indian IT industry?

Mass Exodus At Infosys, Hiring Activity Drops

34,688 employees at Infosys left the company during FY 2016 (2015-16), which has now increased to 37,915 in FY 2017 (2016-17). This is a direct increase of 9% in attrition, and automation, AI is being speculated as the primary cause for these resignations.

If we observe the total number of new hires, then during FY 2017, Infosys hired a total of 44,235 new employees. During FY 2016, Infosys had hired 52,545 new employees. Hence, from hiring perspective, 8310 fewer employees were hired in the last fiscal, compared to the one before.

This slump of 18% and higher attrition rate of 9% means that only 6320 net additions in employee count were recorded during 2016-17, compared to 17,857 during 2015-16.

Hence, overall hiring activity in India has been reduced by 65% at Infosys.

This also means that productivity has increased for the company, and the stakeholders won’t complain.

Chief Operating Officer (COO) U.B. Pravin Rao said, “Utilisation rate also reached 84 percent, which is the higher in Q4 over the past several years..”

The simple business logic says that if Infosys wants even better productivity and ‘Utilization Rate’, then it will mean even less hiring; which will mean even more attrition rate.

Infosys Will Hire More Americans

Meanwhile, in order to deal with the H1-B visa controversy, Infosys has decided to hire more Americans in their US locations.

60% of Infosys’ business comes from the US, and they don’t want to sabotage that. The recent H1-B visa amendments introduced under President Trump will impact 40-60% of all Indian techies in USA, and Infosys need to do something to override the side-effects.

There was a huge uproar when it was found that a public-funded University in the US has outsourced their IT operations to HCL in India. Trump’s anti-immigration stand is now well known as well.

New H1-B visa modifications have also been introduced in the US, and if it gets approved, then it will spell more trouble for Indian IT firms which are dependent on outsourcing dollars.

In a conference call, Infosys Chief Operating Officer U B Pravin Rao said, “We are closely monitoring the overall situation with respect to visa… In the last 24 months, we have focused on increasing our presence in the US with a lot more local hiring..”

Besides, newer development centres & training hubs would be created all over the USA, in order to provide training for the local staff and to generate employment.

Clearly, the focus has shifted to protecting their businesses in the US, and Infosys will do everything possible to ensure that they don’t lose the competitive edge. Even if that means ignoring Indian talent, and hiring more Americans.

He said, “In this year, we will continue that focus. We will accelerate it. We will also start looking at developments and training centres in the US as well..”

Will other IT biggies also follow Infosys’s strategy to stay alive in the US? We will keep you updated as we receive more information.

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